USA TODAY International Edition
4 steps to Trump- proof your small business now
Friday, Donald J. Trump takes up residence in the White House. What does his new administration potentially mean for small business? There’s an old saying: Politicians campaign in poetry and govern in prose. Now, the last campaign didn’t offer poetry from any side, but the grand promises and slogans of a campaign now have to be translated into nitty- gritty details. And for smallbusiness owners and entrepreneurs, the devil’s in the details of regulation and legislation. So which details should entrepreneurs and small- business owners watch out for in the new administration and new legislation from Congress?
Lower business tax rate: During the election, Trump promised lowering the tax rate on “all businesses” to 15%. His latest wording, however, is that the lower tax rate will be “available to all businesses, both big and small, that want to retain the profits within the business.” Look carefully at that wording. The overwhelming majority of small businesses operate as “pass through” entities — sole proprietors, partnerships, “S” corporations, LLCs — which are not allowed to retain profits within the business. With this detail, it’s likely that only “C” corporations — generally larger corporations — will benefit.
Other tax issues: Trump has said he wants to “eliminate loopholes” and simplify the tax code. Everyone can agree with that. But watch carefully what that means. It may mean that deductions many small- business owners depend on, such as deducting the cost of using your car or truck for business, or carrying forward business losses — or incentives for investors to fund new businesses — could be lost or reduced.
SBA loans: Here’s a little secret: Big banks aren’t eager to lend to small companies, so they rely on government- guaranteed loans through the Small Business Administration to motivate them to loan money to small companies. Traditionally, SBA budgets often face more opposition under Republican administrations, which would mean less money available for small businesses to purchase real estate, equipment, fund growth.
Trump’s appointee for SBA administrator is the co- founder of the World Wrestling Federation. We’ll have to see if she has the stomach to wrestle with a Republican- controlled Congress for sufficient funding for small- business loans.
Fintech: In the past few years, there has been a “wild west” of new online alternative small business lenders. With inconsistent regulation, rates typically average 90% to 300% APR, and small businesses have a difficult time figuring out what they’re actually being charged. Even those in the industry agree it’s time for sensible regulation. Whether this will happen carefully, if at all, will affect how much money will be available to small businesses and what protections will be provided against predatory lenders.
Health care: Both Trump and the Republican Congress have vowed to repeal the Affordable Care Act. It’s not clear what, if anything, will replace it. Before the ACA, many smallbusiness owners could not get health coverage at all if they had even a minor pre- existing condition ( which virtually everyone over 40 does).
For women sole proprietors, it was often difficult to find insurance that included maternity coverage. Many would- be entrepreneurs were locked into jobs they no longer wanted just to keep health insurance. Proposals to create a “high- risk pool” likely mean much higher costs for insurance for solo proprietors and very small- business owners.
So what should small- business owners do now?
1. Take deductions you can now. Once things start changing in the tax code, it’s not clear what will stay and what will be eliminated. If you’ve been thinking of buying that new truck, now may be the time.
2. Get health insurance. If you’re not already covered, you may want to lock in a policy while you can. It’s less likely you’ll be kicked off insurance once protection for “pre- existing conditions” is lost.
3. Do your preventive health care now. The ACA required insurance policies to provide free preventive care, such as immunizations, cholesterol screenings, mammograms and more. Expect those free benefits to disappear. Check out this list and get them done ASAP.
4. Stay informed. You’re going to need to know the real details or policy proposal affecting small business. So use news sources that check sources and include the fine print. Don’t believe everything you read on social media.
The grand promises and slogans of a campaign now have to be translated into nitty- gritty details.